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Walmart competes with Amazon 'Prime Day' with a month of free shipping

Walmart on Wednesday said that it is offering a free 30-day trial for ShippingPass, its competitor to Amazon Prime. The move comes in anticipation of Prime Day, a mega-sales event Amazon created last July.

Nick Ut/AP/File

Reusable shopping bags are offered for sale at a Walmart Neighborhood Market in the Chinatown district of Los Angeles.

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June 29, 2016

By Krystina GustafsonCNBC

The world's largest retailer isn't going to sit idly by as Amazon builds out — and strengthens the loyalty — of its legion of Prime members.

In anticipation of the online seller's second Prime Day, a mega-sales event Amazon created last July, Wal-Mart on Wednesday said that it is offering a free 30-day trial for ShippingPass, its competitor to Amazon Prime.

Similar to Amazon Prime, the annual subscription service offers free unlimited two-day shipping. However, it comes at a lower cost. Whereas an annual subscription to Amazon Prime costs $99, being a ShippingPass member costs $49 a year.

An Amazon Prime membership also includes other benefits that aren't part of Wal-Mart's plan, including unlimited streaming of movies and TV shows. Amazon also offers a more diverse and substantially deeper bench of products. Whereas Walmart.com's U.S. site lists more than 7 million items, 20 million products are available through Prime.

"ShippingPass is about half the price of similar programs out there at just $49 a year, and customers who are using it, love it," Fernando Madeira, president and CEO of Walmart.com U.S. , wrote in a blog post. "They shop on Walmart.com more often to take advantage of our low prices, fast shipping and added benefits of no minimum order requirements and free online or in-store returns."

Wal-Mart responded to the last Prime Day event by lowering the threshold for free shipping to a $35 minimum, compared to its typical $50 requirement. But with its ShippingPass program just recently opening up to more customers — not to mention a year's advance warning from Amazon — it was able to up the ante.

In addition to its ShippingPass offering, which provides an additional month to shoppers who are already members, the company promised to provide "amazing items at great prices" starting Friday.

Amazon has not yet provided details on its Prime Day event, though it's widely expected to happen in mid-July.

If Wal-Mart can manage to convert 30-day trial subscribers at the same rate as Amazon, it stands to gain some major business. According to data released by Consumer Intelligence Research Partners earlier this month, roughly 73 percent of Amazon's 30-day trial subscribers pay for the first full year of membership.

However, Prime members are also incredibly loyal, making it all the more difficult for Wal-Mart to muscle in on its territory. CIRP's research also found that 91 percent of first-year paid subscribers renew for a second year, and 96 percent of second-year paid subscribers enroll for a third year.

As the turnaround at Wal-Mart's U.S. business continues to gain steam, its overall digital business has struggled to keep up. Sales at its website once again decelerated during the first quarter, growing just 7 percent. That was well below Amazon's first-quarter growth rate of 32 percent in North America.

At the company's meeting with shareholders earlier this month, CEO Doug McMillon said Wal-Mart would not be more forceful in pushing its online business until the "fundamental building blocks" were in place. That includes building out its assortment and improving its search capabilities.